Fed Rate Cut Hopes Push Asian Stocks Higher; Korea's KOSPI Nears Record

Asian equities rallied on Friday, as growing expectations of a U.S. Federal Reserve rate cut fueled gains across the region. South Korea's KOSPI climbed nearly 0.9% in early trading, moving toward record levels, with semiconductor and technology firms leading the charge.

Japan's Nikkei and Taiwan's Taiex also advanced, reflecting the broad rally. The Financial Times reported that the MSCI Asia-Pacific index has been outperforming global benchmarks this week, underlining the strength of investor sentiment across the region.

Recent U.S. data has added fuel to the rally. A decline in the Producer Price Index (PPI) and weaker-than-expected job growth have given investors confidence that the Fed could begin cutting rates as soon as its September Federal Open Market Committee (FOMC) meeting. Market participants are now pricing in a 25-basis-point reduction, with some forecasters projecting as many as three cuts before year-end if inflation remains contained.

Semiconductor stocks were among the biggest winners. Shares of SK Hynix surged on optimism that AI-driven demand for memory chips will remain strong. Market data shows overseas investors buying Korean shares again after a period of outflows. Analysts say the combination of cheaper valuations and the outlook for stronger exports has made the market more appealing.

Investor Perspectives

Portfolio managers in Seoul and abroad noted that valuations for many AI-heavy stocks remain elevated, but earnings growth and global demand could justify the optimism. "Rate cuts can ease financing costs at the very moment when Korean chipmakers are scaling up to meet AI demand," one Seoul-based analyst said. Another warned that if inflation rebounds or U.S. consumer spending accelerates unexpectedly, the Fed may move more cautiously.

Outlook

As of September 12, Fed policy expectations are the single most important driver of Asian markets. Whether this rally extends will depend on the trajectory of U.S. inflation, bond yields, and currency moves in the weeks ahead. For Korean investors, the Fed's next decision could determine whether the KOSPI finally breaks through to new record highs or pauses under renewed uncertainty.